Want to survive ‘til ’25? Do more in ’24

Do more in ’24 or survive ‘til ’25? Which camp are you in? I suspect a lot of you are in the latter. I don’t blame you. 2023 was a giant turd of a year and while interest rates are expected to fall now inflation has dropped to 3.9%, we are still facing a potential recession as we step into 2024 having failed to wipe the noxious remnants of last year from our shoes.

Understandably, caution remains the byword for investors. Last year ended on a new low as the predicted flurry of end-of-year deals failed to materialise, and although more forecasts were issued in December than usual (people understandably preferring to look forward than look back), they did not exactly signal a golden age of prosperity in 2024.

But here’s the thing: neither did they predict further decline, and what happens when you get to the bottom of the cycle? As the Beatles nearly sang: ‘You go back to the top of the slide, where you stop and you turn and you go for a ride.’

In these helter skelter times, a lot of sectors have already bottomed out or will bottom out this year and that spells buying opportunities. In its cross-sector forecast for 2024, Savills notes: “2024 will be an opportunity to buy at the very bottom of the cycle for commercial investors – with retail, industrial and office space looking comparatively cheap.”

There is also likely to be continued investor appetite for sectors that have emerged strongly from the pandemic, such as BTR, which saw a 10% rise in investment in 2023 to £4.3bn, according to preliminary data from CBRE, and Knight Frank predicts 2024 will be “a pivotal year” for hotel investment, which fell for the third year in a row in 2023 but started to pick up in the fourth quarter.

As Shore Capital’s Andrew Saunders wrote for BE News in December, we should also expect further consolidation among the listed REITs this year, creating “a sector of fewer but stronger companies”. LondonMetric Property and LXi REIT jumped the gun by confirming merger talks in December and there is always speculation over whether British Land and Landsec might merge (to form British Landsec?). Indeed, it could be a big year for M&A activity full stop, with rumours also circulating that two of the biggest surveying firms are in discussions over a potential merger.

Distress will continue to be a driving force. Will investors grasp the opportunities it creates? Until 2023, my answer would have been an unequivocal ‘yes’. Not any longer. Ongoing political and economic uncertainty and wars in Gaza and Ukraine have worsened the inertia – as evidenced by the lack of deals in the weeks before 31 December – and it is hard to see the industry snapping out of it any time soon.

Looming general election or not, it needs to – or parts of it do, anyway. My fear is that the paralysis continues as people take the view that in order to survive they need to remain in hibernation mode for the next 12 months. My hope is that they realise that sitting on their hands and waiting it out is not going to work. This is not an either/or scenario. In order to survive ‘til ’25, the industry is going to have to do more in ’24.

BE News news

That’s certainly our intention here at BE News. Not only will we be publishing more news, views and analysis via the BE Alert daily newsletter and the BE News website this year, we will be running more events – including our first in front of live audiences. First up is our event on Tuesday 23 January asking ‘How do we pursue renewable energy with renewed purpose?’, which I am delighted to say will be kicked off by a keynote from deputy chair of the National Infrastructure Commission Julia Prescot. On Wednesday 28 February, you’ll have another opportunity to join a high-level audience, at our event investigating ‘How to navigate the EPC minefield’, featuring keynote speaker and former chair of the Committee on Climate Change Lord Deben. To find out more and register your interest in either event, please contact our head of operations Sian Wilde at sian@benews.co.uk.

We are also looking for contributions to our next BE Informed collection of thought leadership pieces, which is focusing on one of the strongest growth sectors in the built environment industry: the living sector. So, if you would like to contribute to our ‘Living for the future’ New Year edit, contact our head of sales Nick Stroffolino at nick@benews.co.uk.

We have more exciting news to share, which we will do very soon – watch this space. Meanwhile, my New Year’s Resolution is to practice what I preach and do more in ‘24 to survive ‘til ’25 – and, hopefully, beyond. The time has come to man (or, in my case, woman) up and head to the top of the slide.